Jeff Zucker’s RedBird IMI is offering to acquire Telegraph in a debt-for-equity deal

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Abu Dhabi-backed RedBird IMI has offered to take control of the Telegraph and Spectator as part of a deal to repay the Barclay family’s debts to Lloyds Banking Group.

RedBird IMI, the investment group run by former CNN boss Jeff Zucker, said on Monday it had agreed to provide the Barclay family with funds to “fully” repay the £1.1bn loans to Lloyds and “to pull out the Telegraph and the Spectator”. bankruptcy administration”. The British lender seized the British newspaper group last summer.

International Media Investments, the investment vehicle backed by Manchester City owner Sheikh Mansour bin Zayed Al Nahyan, would also be involved in around half of the deal’s debt financing.

RedBird IMI said if the deal goes through, the company intends to exercise an option to convert debt into ownership of the newspaper group “at an early stage”. RedBird is conducting due diligence to check whether the underlying assets are sufficiently secured to provide financing, one of the people said.

If Lloyds agrees to the proposal, the deal will mark the end of the Barclay family’s ownership of the national newspapers after two decades.

The lender asked a British Virgin Islands court on Monday to postpone until early December a hearing that could have liquidated the Barclay family’s last holding company. A separate auction process is still underway to sell the Telegraph and its sister publication the Spectator.

As part of the proposed deal, Sheikh Mansour’s IMI would retain a significant debt stake in the Barclay family’s last remaining major corporate assets. This includes retail and financial services group Very, according to people familiar with the discussions.

The deal will be structured as a £600m loan secured by RedBird IMI against Telegraph and Spectator. International Media Investments will provide a separate loan of a similar size secured against other Barclay family companies and commercial interests.

This would make up the difference between the £1.1 billion offered to fully repay the Lloyds debt and the Telegraph Group’s £600 million equity value, people familiar with the talks said. Only the £600m loan against the Telegraph would be converted into equity.

Conservative MPs have called on ministers to use the national security law to investigate the deal, fearing Abu Dhabi’s influence over the editorial board of a newspaper traditionally close to the party’s interests.

RedBird has pledged that the Telegraph will be editorially independent to avoid regulatory investigations. US-based RedBird Capital “will assume sole management and operational responsibility for the titles under the leadership of RedBird IMI boss Jeff Zucker,” it said, adding: “International Media Investments will only be a passive investor.”

It said RedBird IMI was committed to retaining the existing editorial team at the Telegraph and Spectator publications and wanted to expand the titles’ reach “in the UK, US and other English-speaking countries”.

Telegraph journalists have raised concerns about editorial independence, according to a memo sent to staff by editor Chris Evans on Monday. “At this point I don’t know more than what you’ve read,” Evans wrote.

People close to the talks said Lloyds would need to examine its own funding sources and financial crime due diligence before agreeing to the proposal.

A person with knowledge of the bank’s situation said it wanted to make sure the deal was viable before negotiating exclusively with the Barclay family. Previous but lower offers were rejected by Lloyds.

After the repayment, the U.K. lender will no longer play a role in subsequent transactions such as a debt-to-equity swap with RedBird, the person added.

But the latest move has angered some bidders given the months of work and cost of putting together bids for the newspaper group. Those interested include hedge fund billionaire Paul Marshall and the media groups News UK and DMGT.

A person close to one of the bidders said the Barclay family had sought to “hand over two valuable media assets to an autocratic government without official control,” adding: “This is a daylight robbery.”

Another person directly involved in the deal said the accusation that the assets were handed over to an autocratic regime was false because RedBird’s founders, Gerry Cardinale and Zucker, are both Americans and based in the United States. would have complete control over the asset. Its reputation in the media should reassure people that the Telegraph would continue to thrive, this person added.